The U.S. budget deficit swelled in May from a year earlier as revenue tumbled and Medicare spending surged, the Treasury Department said Monday in its first monthly accounting of the government's finances since a deal was reached to suspend the debt limit and avoid a first-ever federal default.
The May deficit shot up to $240 billion from $66 billion a year earlier, more than offsetting the $176 billion surplus recorded in April. The median forecast among economists polled by Reuters was for a deficit of $236 billion.
Revenues for May totaled $307 billion, down 21% from $389 billion a year earlier, with a decline in non-withheld individual income taxes and higher tax return payments accounting for most of the shortfall.
In 2022, more of the non-withheld tax payments had been processed in May, in part because of Internal Revenue Service staffing issues, and capital gains taxes associated with the 2021 tax year were more substantial a year ago at that time.
Outlays rose 20% to $548 billion, with a tripling of spending on the government-run Medicare health program for seniors driving much of the increase.
Through the first eight months of the fiscal year, which began in October, the Treasury reported a cumulative deficit of $1.165 trillion, up from $426 billion a year earlier.
President Joe Biden on June 3 signed legislation suspending the $31.4 trillion cap on U.S. debt until January 2025, after striking a deal with congressional Republicans with just two days to spare before the government was due to run short of the funding needed to cover all of its bills.
Since then, Treasury has announced plans to rebuild its depleted cash position, which had fallen to below $23 billion earlier this month and was up to about $88 billion as of last Thursday.
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